Citigroup Accused Of Predatory Lending... To A Private Equity Firm!

PE Firm Terra Firma is suing Citigroup (C) for facilitating its acquisition of music label EMI during the PE boom years.

Of course, that acquisition turned out to be a disaster — like so many deals done in the age of cheap money.

In otherwords, Terra Firma is basically accusing Citi of being a predatory lender.

NYT: In its complaint, filed in New York State Supreme Court, Terra Firma says that it was essentially tricked into paying £4 billion, or $6.5 billion, for EMI in May 2007, near the height of the private equity boom. The private equity firm and its chairman, Guy Hands, have since been criticised for paying too high a price for the music publisher only months before the credit markets began to implode.

Citigroup has also been criticised for lending billions of pounds to the deal — a loan it was unable to resell as planned when the debt markets faltered.

Terra Firma and Citigroup have since been locked in a struggle over control of EMI. Many analysts have speculated that the most likely outcome for EMI, which has lost prominent artists like Radiohead, is a fire sale to a rival like the Warner Music Group, perhaps as part of a bankruptcy proceeding.